Moody's on European Exposure
Moody's Investors Service sent a press release entitled, "Moody's: MMF exposure to European banks hits 12-month low at the end of 2013. It says, "US money market funds (MMFs) have reduced their exposure to European financial institutions by 18% in December 2013, while Euro and Sterling MMFs reduced their exposures by 8% and 6% respectively, says Moody's Investors Service in a series of three new quarterly MMF reports published today. Due to year-end redemptions, European funds' combined AUM dropped by 6.5% over Q4, and their maturity profiles shortened significantly, by 7 days on average." The release adds, "In US domiciled funds, aggregate exposure to European financial institutions stood at approximately 25% of total investments, or $168 billion at the end of December, down from 30% of total assets or $205 billion at the end of November. Funds also reduced their maturity profiles and increased their liquidity levels in anticipation for year-end redemptions.... Euro MMFs have experienced a sharp decrease in AUM (-6.5% or -E4.3 billion) to reach their lowest level in 12 months.... Funds' aggregate exposure to European financial institutions decreased EUR 4.1 billion to EUR 23.5 billion (38% of AUM) during Q4, due to lack of suitably rated counterparties and banks' reluctance to borrow at year-end due to balance sheet considerations."
